World Oil soars to record over $US80
Pastor Dale Morgan
World Oil soars to record over $US80*
From correspondents in New York
September 13, 2007 07:14am
Article from: Agence France-Presse
CRUDE oil prices burst into record territory overnight as New York
futures topped $US80 a barrel, with traders fretting over a big drop in
US reserves and a new tropical storm in the Gulf of Mexico.
The contract for light, sweet crude for October delivery closed at
$US79.91, a jump of $US1.68, after peaking at $US80.18.
That smashed the record of $US78.77 on August 1.
In London, the price of Brent North Sea crude for October delivery
settled up $US1.30 to $US77.68 per barrel after rising as high as
$US77.93, approaching the all-time high of $US78.60 on that exchange.
Prices shot higher after news that US crude reserves fell by a
sharper-than-expected 7.1 million barrels over the past week.
"The seven-million barrels drop in crude oil stocks was the primary
surprise" of the Department of Energy report, Citigroup analyst Tim
Evans said.
Also pushing prices higher was news of the formation of Tropical Storm
Humberto, which could affect oil installations in the Gulf of Mexico.
John Kilduff, analyst at MF Global, said the rally was fuelled by strong
momentum as well as supply factors.
"There are obviously supply fears," he said.
"We're getting increasingly into a drier situation in respect with the
amount of gasoline in storage. There is zero room for error."
Mr Kilduff said he believes prices will move above $US80 a barrel and
hold there "for a period of time", but that "I think we will see lower
prices in the fourth quarter".
The fresh New York high also came as the International Energy Agency
lowered its predictions of global oil demand for this year and 2008
because of ongoing turbulence across financial markets.
The IEA, which acts as energy policy advisor to industrialized
countries, reduced its demand forecast to 85.9 million barrels per day
in 2007 and 88 million bpd in 2008 from its prediction last month of 86
and 88.2 million bpd respectively.
"Looking ahead, continued high prices may further dent demand," it said
in its latest monthly report.
In recent months, oil prices have been driven higher by unrest in
crude-producing nations - notably Iran and Nigeria - as well as a lack
of global refining capacity and fear of hurricane damage to Atlantic oil
installations.
Yesterday, OPEC said it would pump an extra 500,000 barrels of oil per
day from the start of November.
But most traders viewed that as a symbolic move that would do little to
help ease the supply crunch.
Analyst David Kirsch from Washington-based consultancy PFC Energy said
the OPEC decision "will take some of the near-term supply concerns off,
but shouldn't put too much downward pressure on markets".
Saudi Arabia appeared to have forced through the increase in the face of
stiff opposition from the majority of its OPEC partners.
OPEC produces about a third of global oil supplies.